Gambia’s Central Bank has dropped interest rates from 22 percent to 18 percent following orders by the government to help revive the economy.
Authorities made the changes this week to make borrowing and paying easier, according to a Central Bank official.
Gambia’s financial year is wrapping up, and economists are expecting the new interest rates to stay steady for a while.
Gambia has a long history of high-interest rates with government borrowing making it difficult for most small business to secure loans to finance their businesses.
The move will make several banks drop interest charges and get more clients taking loans to maximize their profit margins.
Many Gambian families rely on bank overdrafts to survive leaving household debts high.
Wages are stagnant around the country, and the government seems hesitant to make salary changes in the absence of a major economic shift.
Gambia had been politically and economically isolated for decades under ex-president, Yahya Jammeh, who stands accused of interfering with the country’s economic policies.
The new government of President Adama Barrow is trying to reform the economy to attract foreign investors and create jobs.
The outlook of reviving the economy will be supported by the low level of interest rates. The new reduction will be one of the lowest in the West African nation.
Earlier in the year, a rate hike had seemed imminent following months of political turmoil sparked by Jammeh’s refusal to step aside.
The EU and the IMF stepped in rescuing the country’s economy and experts have recently revised their opinion on the country’s economic outlook and welcoming the rate reduction.